Holley Reports Mixed Q3 Earnings

Holley Inc HLLY reported a third-quarter FY22 sales decline of 3.1% year-on-year to $154.78 million, beating the consensus of $152.77 million.
The gross profit decreased 25.8% Y/Y to $48.4 million with a gross margin of 31.3%.
Selling, general and administrative expenses rose 10.5% to $31.9 million.
The operating margin was 2%, and operating income for the quarter decreased 60% to $3.1 million.
The company held $16.6 million in cash and equivalents as of October 2, 2022. Cash used in operating activities totaled $(8.7) million.
Adjusted EBITDA decreased 53.8% Y/Y to $16.4 million.
Adjusted EPS loss of $(0.04) missed the consensus of $0.06.
"Profitability was negatively impacted by lower production volumes that drove negative operating leverage and manufacturing inefficiencies, especially earlier in the quarter," said CEO Tom Tomlinson.
Outlook: Holley sees FY22 sales of $695 million - $710 million (prior view $700 million - $725 million) versus the consensus of $706.68 million.
The company expects FY22 adjusted EBITDA of $118 million - $124 million (previous view $135 million - $145 million).
"While we are encouraged by the improvement we saw in September, challenges with the supply chain, manufacturing inefficiencies, freight costs, and elevated expenses continue into the fourth quarter," said Stephen Trussell, VP of Finance and Interim CFO.
Holley also announced the appointment of Brian Appelgate as Interim Chief Operating Officer (COO).
Price Action: HLLY shares are trading higher by 6.68% at $3.19 on the last check Tuesday.

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